“SanDisk CEO Eli Harari profited from his physics education by inventing the use of memory chips to store digital photos on tiny, removable cards. The company now sells more than 100 million memory cards a year. It recently topped $2 billion in sales, including royalties from rivals licensed to make cards… SanDisk is now expanding beyond photography, with USB flash drives, cards for cellphones, digital music devices and video game systems. Harari held management jobs at Hughes Aircraft, Intel and Honeywell before founding SanDisk (originally named SunDisk) in 1988. He spoke to USA TODAY’s Jefferson Graham at SanDisk headquarters in Silicon Valley’s Sunnyvale, Calif.,” USA Today reports.
Graham: A year ago, SanDisk wasn’t even in the digital music business. Now, with your SanDisk Sansa digital music player, you’re No. 2 in market share behind Apple Computer and its red-hot iPod. How did you come so far, so fast?
Harari: …We had a significant advantage over competitors, because we could get flash memory at lower costs than (Apple CEO) Steve Jobs could. We felt if we could leverage our 150,000 retail locations that sell our memory cards to sell our MP3 players, too, we could really have something. And we were proven correct. We came out of nowhere, and zoomed past Sony, iRiver, Creative and all the rest.
Graham: Apple has 78% of the digital music player market; SanDisk has 10% of the “other” category. Apple has sold more than 42 million iPods. You’ve sold 1 million Sansas. How do you catch up?
Harari: This month, we’re introducing a new player, the Sansa e200, and it’s superb. We feel it’s far better designed than Apple’s Nano, which also uses flash memory instead of a hard drive to store the music. Our new Sansa is priced attractively and has many more features than the Nano. You can view pictures and videos on our unit. We have FM radio, voice recording, a slot to add extra memory from a card, and a removable battery. The Nano doesn’t have those…
Graham: Many analysts have said that Apple has ruled in digital music because of the seamlessness of the iPod and iTunes Music Store, where Apple fans buy digital music. SanDisk doesn’t have a music store. You work with multiple partners, such as Rhapsody, Napster and Microsoft, which provide the software. Are you hurt by not having a store?
Harari: Apple deserves a lot of credit and has done a superb job. But they have a closed, proprietary system. We work with, as you say, Rhapsody, Napster, Yahoo and many alternatives. That’s a plus. Apple hasn’t had a competing alternative that’s just as good. But that’s going to change. We are not going to be a 10% player. We will improve our position.
More in the full interview here.
Obviously, Apple’s solution is no more “closed” than Microsoft’s. In fact, it’s far less “closed.” Apple’s iTunes is clearly available to both Mac and Windows users, covering the vast majority of the market. In contrast, Microsoft requires that users of its DRM (Napster, etc.) run Windows and Windows only; Mac users need not apply. Apple’s solution supports supports tens of millions more users (who are – on the whole – richer and better educated, hence more likely to have disposable income to buy media content online) than Microsoft’s proprietary DRM. If anything is “closed,” Microsoft’s DRM and, by extension Napster and the other also-ran outifts that use Microsoft’s DRM, are the most closed. SanDisk’s Harari is being disingenuous to try selling SanDisk players with the “Apple’s closed, proprietary system” argument when his players rely on a patchwork of struggling online outfits that are all stuck with Microsoft’s even more closed, proprietary system.
To paraphrase what we wrote back on Feb. 28th: The line “includes an FM radio and tuner” is so-tired-it’s-dead. Consumers do not care. Just look at the numbers. It’s a feature without a market. If you really want FM radio on your iPod, get Apple’s iPod FM Radio Remote.
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Related article:
Apple’s vs. Microsoft’s music DRM: whose solution supports more users? – August 17, 2005
Joke of the Day: Red Herring headline: ‘Creative may be iPod threat’ – February 28, 2006
WHAT? No built-in shortwave radio? Crap.
I think I’d not mind the removable battery and memory slot in an ipod, perhaps compatible with my digital camera so I could just transfer some files in the field, or increase the memory in the future… not bad ideas. Also, voice recording.. but keep the interface simple, the look clean. Video on a flash-memory device. Then, I’m all over the iPod.
Did anybody notice what the article actually said ?
Apple has 78% of the digital music player market; SanDisk has 10% of the “other” category.
So Apple sells 78%, and Sandisk sell 10% of that remaining 22%. Which means that 90% of that 22% is sold by other manufacturers, or that SanDisk’s market share is about 2% of Apple’s.
42 million iPods compared to 1 million Sansas.
Is it worth paying any attention to yet another ambitious CEO who reckons they have the next iPod killer ? His arguments are no different from those put out by all the previous supporters of ‘iPod killers’. None of the other rivals have got remotely close to Apple’s position, why does he think that his one might ?
He didn’t innovate his product, he merely copied Apple. He didn’t innovate his arguments, he followed the Microsoft-approved script that all the others use.
But his real problem is that when asked about what he can offer instead of iTunes and iTMS, he says “We work with, as you say, Rhapsody, Napster, Yahoo and many alternatives. That’s a plus.”
If he thinks that not having iTunes and that working with three money-losing music stores is a plus , then he will certainly fail.
“But they have a closed, proprietary system.”
Interesting. For example all major, successful automakers have “closed, proprietary” systems. In fact, being able to do it all yourself is considered a crucial competence. Those who can’t, die.
Why does every analyst think anything electronic has to be assembled from commodity spare parts (like typical PCs), and documented to the hilt so anyone can copy it? Why the double-standard between consumer automotive and consumer electronics?
Maybe not in US, but here in Italy the silly insistence of Apple of NOT include an FM tuner and microphone INDEED limit the sales of iPods.
I still have not bought it for that exact reason, and many simply buy other brands.
[…] where Apple fans buy digital music.
Er, what?
PC Apologist –
I vote death.
I don’t need an FM tuner on the iPod, but it is clear that some portion of people would like it (talk radio, sports, etc). I think the correct thing is to keep the FM tuner as an optional add-on, whether it be from Apple or a third party vendor.
Whoa! That’s a bit of circular reasoning. Because Mac users can access Naptster, etc. it’s therefore closed and because you can use an iPod on Apple and Wintel machines, Apple is therefore open.
All of the other players can access music from any store in any format while iPod only works with iTunes. Both systems have closed aspects to them but Apple’s remains the most closed.
Apple and others should not assume that it’s leadership position in the marketplace is assured. The “others” will continue to pound away at Apple and at some point the “others” will discover the right combination of hardward and software that will appeal to more users and begin to erode Apple’s position. It may not happen this year or next but it will happen.
Despite the many rationalization found here, Apple does have a proprietary closed system as closed as anything Microsoft has created. At some point they will have to open it up and they should do it before they are forced to in some belated attempt to hold onto it’s dominant position. If Apple waits until that day, it will be too late.
I think what Apple did in releasing the FM add-on is try to appease everyone – if you HATE the idea of an FM radio then don’t get one. If you feel the need for 1 song, 6 adverts, 5 minutes of a DJ, 3 adverts, 1 song etc. then buy the FM add-on.
A smart solution, shame people can’t see this.
MW: clearly
SanDisk CEO Eli Harari
“We believe that in 20 years time, we will be able to fit 10 terabytes of information into a card that’s as small as a quarter. Ten terabytes is the amount of memory we have in the human brain. Ten terabytes could fit 5,000 movies. When you have that kind of memory, you could store a human lifetime’s worth of memory into one of these cards. You could implant a device like this in your head to restore memory.”
OK, has anyone called the men in white coats?
As a Mac user, I sure hate to be classified as a Mac user sometimes.
I don’t like to come off as arrogant, smug, and condescending… even with higher education and a couple of extra dollars in my pocket.
As a Mac user, I sure hate to be classified as a Mac user sometimes.
I don’t like to come off as arrogant, smug, and condescending… even with higher education and a couple of extra dollars in my pocket.
As a Mac user, I sure hate to be classified as a Mac user sometimes.
I don’t like to come off as arrogant, smug, and condescending… even with higher education and a couple of extra dollars in my pocket.
As a Mac user, I sure hate to be classified as a Mac user sometimes.
I don’t like to come off as arrogant, smug, and condescending… even with higher education and a couple of extra dollars in my pocket.
kingmel’s right.
quit with the stupid wealthier and better educated stuff. or, if you do continue, please stop with the righteous indignation when pc users say mac users are total jerks.
I like SanDisk because they appeared to be “competing” with Apple by actually releasing nice products, not by complaining about Apple being a so-called “closed” system, which is not true when compared to the MS alternative (and it’s obvious consumers don’t care). Now, the SanDisk CEO is spouting off with the same old lines used by Apple’s other whining competitors. What a shame…
“”you could store a human lifetime’s worth of memory into one of these cards. You could implant a device like this in your head to restore memory.”
Yeah, he lost me too with that gem.
CEO’s sometimes get off into the giggle weeds with future visions. But when that vision is your product turning people into human camcorders, some questions (and red flags) need to be raised.
Wonder what all Harari has implanted in HIS skull…
It’s good to see what the competition of the hour is. I like seeing options. Having three or more ipods you realize that there is something better than what Apple currently makes and it doesn’t just have to be the next iPod.
These guys do have an edge in the fact that they’ve got their memory for the lowest price. Apple and Dell have both started buying up all the future components available in order to ‘meet demand’. This might stop most guys, but this company can make a run for it.
At the very least this should inspire Apple to make the nano suck less. Why doesn’t it do a lot more stuff? Because that cuts into the higher end ‘iPod’. Why does the iPod have a tiny screen and terrible battery life? Because it was rushed out due to Apple feeling complacent over their dominance and not really thinking ahead about video. This is a bump in the lower line. Compete or lose market share.
Open or Closed system. If you have any size PC you can play music on it from either system. If you have a mac you cannot. This means PC users have more options than Mac users. Try to rationalize or argue all you want, the fact is that Windows Media is a tighter system because it is platform dependent (exclusive).
People bought mp3 players before there was any drm. They still will. To some degree it’s not that important what store does what. With the small profits from ITMS (excluding any future video boost), Apple has very little to lose letting windows media junk run on their system through licensing IF they start facing some trumped up monopoly charge or users get mad enough about fair use being thrown out the window in so many aspects of their lives that they take on any DRM.
AM would be great. Why people always use music and commercials as a definition of FM is beyond me. AM is for talk, FM is for Sports. Game blacked out in your area? Don’t like the commentators on the feed you’re watching. FM to the rescue. If you can use your ipod that everyonce in a while that you need it more power to your iPod and Apple.
FM argument =
1) ‘since Apple did not make it standard it’s not good’
2) ‘other companies use it so it must be bad’
3) ‘drone, cult member, brain-checked-at-door…<insert justification>’
Sorry guys, this story should be about competition from a company with access to new and cheap memory.
I’m starting to think people don’t want FM because it might be too difficult to use. I mean…Apple didn’t even introduce track programmability ‘playlist-to-go’ until late in the game because it would have probably confused half the drones out there.
Keep screaming about how less is more..that lack of a 50 cent feature that might swing a potential buyer (fm)….that unnecessary mouse button or trackpad button that we would all use if it was ‘Apple Branded’….dark ages time. These guys are gonna get medieval on you if you don’t think for yourselves.
MDN Magic Word= help, as in ‘please help the drones open their eyes and save Apple for the future’.
US population = approx. 300 million
EU population = approx. 600-700 million
The rest of the world = approx. 5 billion
Even if FM radio is no big thing in the US that is no reason not to include it. In Europe FM radio is important and that marked is twice the size of the US. Including a FM radio in the iPod would help the sales a lot in Europe, and probably in other parts of the world also.
Apple does have a proprietary closed system as closed as anything Microsoft has created.
So non-proprietary AAC is more closed than proprietary WMA? Is up down now?
I’ve always suspected that Microsoft people posted here.
Apple IS a closed system. So does Sandisk and certainly Micro$oft. And just not start talking about Intel etc.
As for AM/FM radio, lots of people DO care, especially those not living in USA. Apple sold 50 million iPods – it could sell double than that. It took years for Apple to educate people that missing FM radio from a mp3 player is not that bad that it sounds. That was one reason iPod had a slow start (the other of course was price). But what Apple’s marketing couldn’t do efficiently, people talk did it. Early adopters and Mac fans did their part evangelising the benefits of simplicity, quality, integration and HD storage. Once the momentum started there was no slow down, helped by Apple realising that “features” are not neccesserily a bad thing. Now Apple is start learning the difficult part: how to keep a monopoly. Acting the same as the opposition will let Apple be “different” … different monopoly that is.
Whare are QuickTime and iTunes for Linux? Apple could kill this argument once and for all if they licensed Fairplay to the open-source desktop crowd. Use any OS you like with your iPod. There’s no way that could be called closed without making the commentator look ridiculous.